Helia shares tank as CBA turns to rival mortgage insurance providers
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More news: Helia shares plunged after the mortgage insurance group said Commonwealth Bank is in talks to switch to a rival provider.
Helia shares were down 24.95% to $3.64 at 11:41am AEDT.
Helia 'disappointed' as CBA eyes rival for key mortgage insurance deal
The news: Mortgage insurance provider Helia Group said its lenders mortgage insurance (LMI) contract with Commonwealth Bank is at risk after the big four lender entered into exclusive negotiations with an alternative provider.
The numbers: Helia said the LMI business underwritten under its contract with CBA represented around 44% of the group's gross written premium (GWP) in the 2024 financial year.
The context: The group advised that if CBA's negotiations with the alternative provider are successful, its own service and supply contract with the bank will not be renewed beyond the current expiry date of 31 December.
Helia said it will continue to generate GWP from CBA until the end of the current financial year and the financial impact of ceasing to write new business from CBA from FY26 will "emerge gradually over time".
Helia reiterated its previously issued guidance. However, it noted that the expiry of the CBA contract will likely increase the level of organic capital generation and scope for further capital management activity.
Earlier this month, Macquarie downgraded Helia from 'neutral' to 'underperform', partly due to risks around its long-term contract with CBA. Helia was advised of CBA's intention to issue a 'request for proposal' relating to its group-wide LMI requirements in June last year.
What they said: "Given our longstanding and successful relationship with CBA, we are disappointed in this development," said Helia CEO and managing director Pauline Blight-Johnston. "We would have welcomed the opportunity to continue our partnership."
"Helia presented CBA with a strong offer that balanced the strategic importance of its relationship with CBA with the need to maintain adequate returns on equity for our shareholders," Blight-Johnston said.
"We will continue to work closely with CBA to ensure that we are supporting both CBA and its borrowers by maintaining our high service standards through to December 2025 and beyond."
The source: ASX
